Search form

You are here

Outsmarting Democracy?

American politics is always concerned with the proper scope of economic markets. It is refreshing to see Bryan Caplan acknowledge that typically the alternative to markets, in a democratic country, is democracy. It is provocative, then, that his own frank preference tends toward more markets and less democracy.

Caplan builds on a long line of research documenting how poorly people understand political issues, dissenting only in being even more pessimistic than most. He also agrees with previous authors that voters have no reason to do better. Since an individual’s vote, by itself, won’t make any difference, it isn’t rational to invest much effort in being informed. So people will often believe what feels good regardless of the evidence, and then vote accordingly. Caplan frames these findings as a general indictment of democracy (See his section title: “What’s Wrong With Democracy and What’s Better?”). Caplan really sketches two alternatives to democracy: experts (especially economists) and markets. Surely they both have a place, but I doubt that there’s a strong case here for the new shrinkage of democratic prerogatives that Caplan appears to favor.

The main reason Caplan gives for substituting markets for democracy is that economists are fond of them. So, first, some thoughts about experts. Consider two unabashed proposals of Caplan’s. First, he proposes giving more votes to those with college degrees (“The data show that well-educated voters hold more sensible policy views.” The supporting citation: Caplan’s article, “What Makes People Think Like Economists?”). Second, he suggests giving a panel of economists a veto power over legislation.

If we know which survey questions measure voter competence, then we could presumably devise an exam to determine how many votes each person will be allowed. So why not improve on the literacy tests of old, and on the diploma requirement, in a more discriminating exam? We would want questions about such things as economics, history, and science. Here are some further pertinent questions, this time of a different and partly moral kind:

When is it appropriate to risk American lives in a military effort overseas?

How much intermingling of religious organizations with government organizations is appropriate?

How much individual liberty (in, say, marriage law, freedom of speech, sexual liberty, etc.) should be compromised in order to protect a traditional family structure?

On the factual and technical parts of the test economists and others with university degrees would do better than many others. But would they do better on the whole test? Surely it is the whole test that matters. How to slow inflation, or to mobilize people for war, or to raise taxes for social programs is one sort of thing; when these should be done is another.

So how would college graduates and economists do? Consider the demographics of the economics profession, and of college education in America in, say, the decades just before 1949 (the year Caplan reports that Great Britain did away with extra votes for college graduates). To take one example, the need for racial justice was urgent, and the idea that an even smaller, whiter, more male, more Protestant electorate would have performed better on the morally most important matters is far from obvious. It’s not that their education or economic expertise damages their competence. Rather, the demographics of expertise do not necessarily mirror the population in all other respects while simply adding on the benefits of factual and technical expertise. Those kinds of expertise often travel with other differences, such as race, class, gender, and religion, and the resulting differences (i.e. sampling errors) might well do more harm than the supposed experts’ particular kind and amount of extra education does good. Sometimes we know which demographic differences to worry about, other times we do not. In the 1930′s many did not. In present times, how can we know whether we do or not?

I don’t doubt (as many readers will) Caplan’s assumption that some people are wiser than others on the (always partly moral) questions of politics. I do doubt that there is a publicly available criterion for identifying them. I agree with Caplan (against many) that the quality of political decisions matters, not just the process. So democracy can be fairly challenged on that score. But it has an answer. The question isn’t whether democracy will perform the best. Maybe Caplan is right that economists would perform better than democracy, and maybe I’m right that my morally wise mother would perform better overall than the economists. That settles nothing, since there is no entitlement to rule others based simply on the fact that you know what is best. Democracy, on the other hand, can effectively bring intelligence to bear on public problems in a way that avoids these controversial invidious comparisons. That, I think, is its claim to authority.

So much for experts. But what about markets? They have well-known advantages in many contexts, and, like democracy, they don’t presume to separate the wise from the ignorant. Obviously, many decisions are already under the control of markets rather than politics. But Caplan recommends removing many new things from voters’ hands. How many new things? Since we aren’t given any specific proposals that could be judged on the merits, I interpret Caplan as pressing the superiority of markets over democracy in a general, and potentially radical way. He writes, “So what remedies for voter irrationality would I propose? Above all, relying less on democracy and more on private choice and free markets.”

Caplan mentions that voters are not very smart about toxicology and cancer. I don’t know if he means that this is a reason to shrink democratically authorized regulation of medication trials, medical licensing, hospital certification, or what. If so, we’d want some support for thinking that a regime of caveat emptor would produce better outcomes. He mentions foreign policy as a broad area in which voters have irrational biases. But what would it mean to let foreign policy itself be determined by markets (as opposed to a pro-market foreign policy, which might be democratically determined)?

Caplan’s favorite example of voter ignorance in this piece is immigration. We could relax limits on immigration, but this would be a legal step, and it would require a political decision, democratic or otherwise. How could markets take the place of the political decision whether or not to open the borders? If you’re pro-market you might like the idea of open borders, I get that. But that isn’t responsive to the question: should immigration policy be made politically or (somehow) by markets? Which decisions about immigration (if any) does Caplan think should be moved from democratic to market control? (Perhaps his preference here is not markets but the sort of expert rule of economists I have questioned above.)

I also wonder if there isn’t a double standard at work. Voters and market actors are the same people, so we should expect the charges of ignorance and irrationality to be leveled against people in both guises. For example, as Caplan says, people are tempted to believe some things against the evidence because believing them is emotionally satisfying. But this must be true in market life as well. We might think Guinness is good for us because, well, that would be nice. Maybe the difference is that mistakes are less troubling in markets. Perhaps irrational market agents only hurt themselves. Caplan points out that, “If the average voter is irrational we all have to live with the consequences.” But surely there are consequences if the average consumer is irrational too. Suppose the safety of medicines were left to the market rather than a regulatory agency. If many consumers thought that peach pits cure cancer better than chemotherapy, then we would all suffer from the lost lives that result. Or suppose all schools were privatized. If many parents and school board members thought that evolution is “just a theory” alongside creationism, and they designed the curriculum accordingly, then the progress of science would be slowed, the entanglement of religion with government would increase, and there would be broad consequences for all of us. If consumers underestimate the dangers of man-made global warming they might destroy the planet. In the aggregate many market mistakes, like voting mistakes, affect everyone.

Perhaps in these areas Caplan would not wish to substitute markets for democracy. But then Caplan must agree that the fact that voters are not very well informed about these issues, or many others, does not provide any strong case for taking things out of their hands and turning them over to experts or markets. Of course it’s possible that some new areas should be turned over to experts or market mechanisms, and Caplan might well propose some good candidates in his reply. But there are probably areas where experts and markets should be democratically better reigned in as well. Do we know which of these predominates from knowing that voters are not very well informed? For the reasons I’ve given, I don’t think we do.

Also from This Issue

In this month’s lead essay, George Mason University economist Bryan Caplan argues that voters are not just ignorant, they’re irrational. According to Caplan, when the cost of holding irrational beliefs is low—as it is in religion and politics—we should expect a lot of irrational belief. “Even when his views are completely wrong,” Caplan writes, “[the voter] gets the psychological benefit of emotionally appealing political beliefs at a bargain price.” But the low personal cost of irrationality has a high social cost. Caplan provides statistical evidence of voters’ “systematically biased beliefs” in economics, and argues this undermines the electorate’s ability to implement good policy. Caplan suggests we should rely “less on democracy and more on private choice and free markets,” in addition to several other provocative reforms sure to make civics teachers blanch.

University of Virginia political philosopher Loren Lomasky compares Caplan’s criticism of democracy and defense of expertise with Plato’s argument in The Republic, while noting that in a modern system of representative democracy, voters choose among candidates, not policies. “If voters are as intellectually maladroit as Caplan suggests,” Lomasky writes, “then they are incapable of mastery of their elected representatives,” who are thus left with a fairly free hand to set policy. “What [voters] can do, though, is ‘throw the rascals out,’” and that, Lomasky argues, is good enough.

Jeffrey Friedman argues that Caplan’s charge of voter irrationality relies on the unrealistic idealizations of economic theory and that “[v]oters who don’t understand economics because they haven’t been exposed to it, or because they’ve been exposed to it but have found it tough going, aren’t irrational; they’re just ignorant.”

Disclaimer

Cato Unbound is a forum for the discussion of diverse and often controversial ideas and opinions. The views expressed on the website belong to their authors alone and do not necessarily reflect the views of the staff or supporters of the Cato Institute.